Gifting to adult children

[Sanstar]

Interesting thread as we have three adult children, all with very different incomes, spending and saving habits. I’m never really sure where the line is between being supportive vs enabling. What we do to assure equity is I keep a tracking spreadsheet and log anything over $1K.

When one was falling behind the other two, we gifted him $ towards his new truck to catch him up. There’s always something we can fund or contribute to to keep things in balance.

They all know about the tracker, they all have a copy of our will and job action sheet in the event we are disabled. It has very specific instructions about who should do what and when. If there is a concern we’ll resolve it now.

Main goal is to do all I can to assure their relationship isn’t adversely affected by our gifting decisions and/or actions.

 

[Joylush]

Golden sunsets,
That’s a great approach. Thanks for sharing. I’ve done similar mental note taking and balancing to keep things fair. For example, a few years ago I went with my daughter to negotiate the purchase of a new car. She was fully prepared to pay cash for it. On the spot I stopped her from writing the check and insisted on paying for half of it, 10K. She never asked or expected it and I knew she’d worked hard to save the 20K to pay for it without borrowing. So mental note made.

A few years later purchased a 35k nice new truck as a second vehicle for myself. Decided I probably didn’t need it but my son, coming home from a deployment needed a vehicle. Mine was not even a year old but I offered to sell it to him. His choice was I’d sell it to him for $20,000 and gift him $10,000 like I’d done for his sister if he paid $10,000 cash. Or I’d still sell it to him at the very good price of $20,000 and he could pay nothing down and get a loan. He opted to pitch in $10,000 and got a really nice new truck with less than 5,000 miles on it. So both were rewarded equally by showing me they could save their own money.

Likewise I financed my daughter’s home purchase, after she showed she could put down 20% and had reserves enough to cover unforeseen future maintenance needs on the home. This saved her around 5k in closing costs.

I wasn’t willing to get into a loan situation with my son because I didn’t want any potential negative dynamic between us. He wasn’t ready to buy a house and was purchasing one in a depressed area where I will bet he will lose on when it’s time for him to sell. But I supported his decision regardless of not thinking it was the best choice and contributed to his down payment to keep his payments lower. He didn’t have adequate reserves saved and will not be located in the area long enough for the home to appreciate enough to sell at a profit. And although I spoke to him about setting aside funds for home maintenance he spends foolishly. So when his AC broke down last summer he had to either finance a new one at a high rate or go without. I guess the positive news is he’s not gotten it replaced and is doing without as opposed to going into debt. I know his salary and his mortgage payment amount and there is no way he shouldn’t have enough saved to replace his air conditioner but for wasteful spending. He has no health insurance concerns or car payments or student loans and gets additional income from having roommates. My gut reaction was to try to solve his problem for him but I stayed out of it. It’s best to let him figure it out for himself.

 

[Golden sunsets]

Golden sunsets,
That’s a great approach. Thanks for sharing. I’ve done similar mental note taking and balancing to keep things fair. For example, a few years ago I went with my daughter to negotiate the purchase of a new car. She was fully prepared to pay cash for it. On the spot I stopped her from writing the check and insisted on paying for half of it, 10K. She never asked or expected it and I knew she’d worked hard to save the 20K to pay for it without borrowing. So mental note made.

A few years later purchased a 35k nice new truck as a second vehicle for myself. Decided I probably didn’t need it but my son, coming home from a deployment needed a vehicle. Mine was not even a year old but I offered to sell it to him. His choice was I’d sell it to him for $20,000 and gift him $10,000 like I’d done for his sister if he paid $10,000 cash. Or I’d still sell it to him at the very good price of $20,000 and he could pay nothing down and get a loan. He opted to pitch in $10,000 and got a really nice new truck with less than 5,000 miles on it. So both were rewarded equally by showing me they could save their own money.

Likewise I financed my daughter’s home purchase, after she showed she could put down 20% and had reserves enough to cover unforeseen future maintenance needs on the home. This saved her around 5k in closing costs.

I wasn’t willing to get into a loan situation with my son because I didn’t want any potential negative dynamic between us. He wasn’t ready to buy a house and was purchasing one in a depressed area where I will bet he will lose on when it’s time for him to sell. But I supported his decision regardless of not thinking it was the best choice and contributed to his down payment to keep his payments lower. He didn’t have adequate reserves saved and will not be located in the area long enough for the home to appreciate enough to sell at a profit. And although I spoke to him about setting aside funds for home maintenance he spends foolishly. So when his AC broke down last summer he had to either finance a new one at a high rate or go without. I guess the positive news is he’s not gotten it replaced and is doing without as opposed to going into debt. I know his salary and his mortgage payment amount and there is no way he shouldn’t have enough saved to replace his air conditioner but for wasteful spending. He has no health insurance concerns or car payments or student loans and gets additional income from having roommates. My gut reaction was to try to solve his problem for him but I stayed out of it. It’s best to let him figure it out for himself.

I agree. Your approach seems to be very adaptable, so I think you'll figure out the best way to handle your original question on gifting. We evened the scales by contributing to DS's home down-payment. DD doesn't own a home yet. She recently relocated back to our area from NYC and needed a car for the first time. She wanted our help in guiding her through the car buying process. We were prepared to gift her some of the needed funds, which she was unaware of, but in the end she was so thrilled to put down 20K of her own hard earned cash and take out a 0% loan for the remaining 20K cost, that we didn't give her anything toward it. She's never actually had any debt( pays off her cc bills every month). I think having credit history will be good for her credit rating and she has rearranged her finances to provide not only for the small monthly car loan of $333/mo but also reserving funds for car repairs, insurance, excise tax and auto replacement. These are good practices to master.

In case you can't tell I'm a bit of a spread sheet nerd and I flatter myself that I know a good bit about personal finance[emoji12] Both kids consider their father and I to be their free financial advisors.

We are giving quite a bit of thought ourselves to systematic gifting, rather than sporadic occasion based transfers of wealth. The only thing stopping us at this point is the grandchildren haven't arrived yet and we likely have another wedding and house down-payment to absorb. Contributing to 529 accounts can absorb a lot of $$.

Good luck with your decisions.

 

[Joylush]

I agree. Your approach seems to be very adaptable, so I think you'll figure out the best way to handle your original question on gifting. We evened the scales by contributing to DS's home down-payment. DD doesn't own a home yet. She recently relocated back to our area from NYC and needed a car for the first time. She wanted our help in guiding her through the car buying process. We were prepared to gift her some of the needed funds, which she was unaware of, but in the end she was so thrilled to put down 20K of her own hard earned cash and take out a 0% loan for the remaining 20K cost, that we didn't give her anything toward it. She's never actually had any debt( pays off her cc bills every month). I think having credit history will be good for her credit rating and she has rearranged her finances to provide not only for the small monthly car loan of $333/mo but also reserving funds for car repairs, insurance, excise tax and auto replacement. These are good practices to master.

In case you can't tell I'm a bit of a spread sheet nerd and I flatter myself that I know a good bit about personal finance[emoji12] Both kids consider their father and I to be their free financial advisors.

We are giving quite a bit of thought ourselves to systematic gifting, rather than sporadic occasion based transfers of wealth. The only thing stopping us at this point is the grandchildren haven't arrived yet and we likely have another wedding and house down-payment to absorb. Contributing to 529 accounts can absorb a lot of $$.

Good luck with your decisions.

I keep spreadsheets too. Lucky kids to have qualified free financial advisors, if they’re smart enough to recognize it. I think being open an honest with them about what we’re doing for each and why is key in keeping good relationships with them. It’s secrecy that causes rifts in relationships.

 

[SecondCor521]

I thought I'd mention what I do with my offspring in case it is helpful. I'm 51M, with DS25, DS20, and DD19.

I do all of my larger gifting at Christmas time. Part of my motivation is to just give them money because I like them (and I have too much and they could use more and I'd like to see them practice money handling). Part of my motivation is to teach them good habits, mostly in terms of saving and giving.

So each year I give each of them a check. They each get the same amount, and I try to increase it yearly. This addresses my first motivation.

Each year I also give them a coupon. This coupon is good for matching dollars to either their Roth contribution or a charity of their choice. I used to hound them to use the coupon, but for the past two years I haven't - if they use it, great, if not, well, I know a bit more about where they're at.

Over time, it is interesting to me that they have changed in unexpected ways. The one kid who didn't use the coupon last year was the first one to use it this year. One kid split their coupon between Roth and charity, which was a surprise but a pleasant one. One kid hasn't used it this year, and that kid would have been the last one I would have guessed to not use it.

...

The other general idea I have is that I'm going to start giving my kids larger chunks of money early on to practice with and probably fail with but hopefully learn from.

When the graduated from high school, they each got a $ gift of money from me. When they graduate from college, they got or will get a $ gift of leftover college funds. My Dad may start gifting them $ to help with his estate planning (this is still TBD). When he passes, depending on the situation, I may disclaim $ to each of them. When I pass, there may be $ left over for each of them.

If I just delayed all that until I died, then they'd get one big chunk of money and, not having practiced, may have blown it all. And I wouldn't be around to advise them.

This way, they'll probably mess up some, but it will be with graduated amounts. Each of those $ in the paragraph above are actually about an order of magnitude larger with each subsequent chunk. As each chunk drops, I hope they will learn from their practice and their mistakes and will be more likely to hang on to it and manage it well. And I'll be around to answer questions or point out things or give advice if they ask.

In either case, my Dad has enough money and I and my sisters have enough money, so it won't matter to us. And since I can't imagine any scenario where I would not divide my estate equally among my children, "my money" will become "their money" eventually. My focus has been on helping the next generation with the knowledge and wisdom to manage and use the money wisely. It dawned on me fairly recently that an unwise child could manage to go through it completely no matter how much I piled up. So the solution to me was to focus less piling up more and to focus more on educating and advising and mentoring the next generation.

My kids are all making really very good money decisions already, but there's always more to learn, and with what's coming their way there will be some fairly advanced money lessons coming as well. I'm trying to dole out those lessons already so they have the chance to absorb them and come back with more questions as they have them, since I'm still around to answer them for now. And actually, there's a very decent chance that they'll have to face more challenging money questions than I did because, properly played, they'll be able to retire a decade earlier than I did and/or have ten times the money I do.

 

[Dash man]

We gave cash gifts this past Christmas to each of our boys and their wives. One does well with investments and I just need to teach him a few things now and then. The other we know have struggled over the years financially. I was so pleased yesterday to find out they are now debt free except for DDIL’s student loans. They opened a Roth IRA and a brokerage account, and bought a slice of Amazon and Moderna. It’s a start! They didn’t realize they could each open a Roth, so now they’ll open a second one. I recommended a broad market low fee ETF to them and explained the difference between stocks, ETFs and mutual funds. They’re listening and asking questions!!!!! There’s hope!

 

[Joylush]

Secondcor521,
Thank you for sharing and the words of wisdom. You gave me an idea. I think I will give them each $5000 plus a coupon to match 100% of any Roth IRA contribution they make up to $3000.

So they can choose to use $3000 of the $5000 gift to put in their Roth and get $3000 more for a total of $8000. Or they can opt to use the $5000 for something else and not contribute to their Roth. At least I’m thinking of doing something like that.

Like anyone I’m just wanting to encourage wise decision making and avoid enabling poor decision making.

 

[ivinsfan]

Secondcor521,
Thank you for sharing and the words of wisdom. You gave me an idea. I think I will give them each $5000 plus a coupon to match 100% of any Roth IRA contribution they make up to $3000.

So they can choose to use $3000 of the $5000 gift to put in their Roth and get $3000 more for a total of $8000. Or they can opt to use the $5000 for something else and not contribute to their Roth. At least I’m thinking of doing something like that.

Like anyone I’m just wanting to encourage wise decision making and avoid enabling poor decision making.

Isn't that a great idea! And I like the idea of doing it every year and giving each kid a chance to mature and change. The hard thing will be biting your tongue if someone doesn't take the match. The good thing is giving each child the exact same opportunity to save.

 

[SecondCor521]

Isn't that a great idea! And I like the idea of doing it every year and giving each kid a chance to mature and change. The hard thing will be biting your tongue if someone doesn't take the match. The good thing is giving each child the exact same opportunity to save.

I tell one of my kids to "play the long con". The idea being that it's not this Christmas check that matters, but their character development, increase in knowledge, and general progress over the next twenty or thirty years. Or in that one's case, it's not the having a fun time with his girlfriend for a week when she visits, but having a multiple year and possibly permanent relationship with a woman who is a college graduate in her own right with good career opportunities.

I also remember that the lessons I've learned the best are from my failures. And nearly all failures are not catastrophic.

The other thing I try to do is accept each of my children for where they are and just try to nudge them in the direction I would like to see them grow. ("Just as a twig is bent, the tree's inclined" - A. Pope)

Each of my three kids is wonderful but also very different from each other. So they're all treated equivalently in that I try to impart all of the lessons to each of them, but the actual lessons I focus on with each kid does vary over time and context and what they're working on at the moment.

I think someone else mentioned above about letting go. I want all of my kids to do well, but at some point I can see that it's up to them what they make of the opportunities and resources available to them. And I also have to respect that as adults they have the right to make decisions that are different than ones I would have made, because they're different people. And it's their life, not mine. So I try to think of it in terms of a football analogy - as long as the ball is in bounds, they can run the ball or pass the ball or do a lateral or a trick play. And sometimes there are penalty flags! So if what they're doing is legal and ethical and moving them towards being happy, healthy, safe, and self-sufficient, then I'll help them even if it's not the exact play I would have drawn up.

I'm trying to play for 30 years from now when the tree is fully grown. I'm trying to play the long con.

 

[ivinsfan]

@Secondcor521 you expressed this perfectly, I think it would be every parents dream for their children to grow and mature in that way. The hard thing is to watch, guide and love from enough distance and not to meddle.

Every parent of more then one child knows how different they can be with different strengths and weaknesses. It's not our job as parents to mold them into what we think is the "perfect" person. Easy to say and yet hard to do.

 

[qwerty3656]

I'm late to this thread and have a different question. Does the difference in ages matter with regard to how much you give? My oldest is near 30, my youngest is near 20. If I start gifting now, is it fair to the 30 year old who got nothing for 10 years?

 

[Aerides]

I'm late to this thread and have a different question. Does the difference in ages matter with regard to how much you give? My oldest is near 30, my youngest is near 20. If I start gifting now, is it fair to the 30 year old who got nothing for 10 years?

No, because one day you'll stop (for the same reason we all will...) and they might be 60 and 50 by then, and that won't be unfair either. They'll still get the same number of gifts.

If the older even remotely complains because he didn't have gifts in his 20's, you can slap him a little.

 

[Joylush]

I'm late to this thread and have a different question. Does the difference in ages matter with regard to how much you give? My oldest is near 30, my youngest is near 20. If I start gifting now, is it fair to the 30 year old who got nothing for 10 years?

That’s a good question. Sometimes no matter how hard we try to be fair we can’t cover everything. Your oldest might live ten years longer than the youngest. I’m fortunate that my two are the same age.

In reality if you gave the same to each one every year it still comes out equally, If you gave each $5000 a year for ten years and then stopped they both will have gotten $50,000. Neither is penalized in any way for being older or younger. That seems pretty fair.

 

[oldphd]

Secondcor521,
Thank you for sharing and the words of wisdom. You gave me an idea. I think I will give them each $5000 plus a coupon to match 100% of any Roth IRA contribution they make up to $3000.

So they can choose to use $3000 of the $5000 gift to put in their Roth and get $3000 more for a total of $8000. Or they can opt to use the $5000 for something else and not contribute to their Roth. At least I’m thinking of doing something like that.

Like anyone I’m just wanting to encourage wise decision making and avoid enabling poor decision making.

This sounds like a great idea, and assuming they leave it in the Roth it satisfies your intention. However, contributions can be withdrawn.

I funded both of my kids Roths through college when they had modest earnings. They are now in their 30s with good sized Roths for their age. One of them lives in a HCOL in Southern CA). He has owned a home for almost 7 years, made a decent return and built equity thanks to low interest rates. Downpayment was gifted from us and his inlaws. His DW, who is an artist with no income producing skills, wants him to take out his Roth contributions and invest in more Southern CA real estate. She thinks they will make a killing. I happened to find out by accident, he had no intention of sharing. His DW is a very domineering person who always needs to get her way, so I won't be surprised if it happens even if he doesn't think it's a great idea.

Aside from where the real estate may or may not be going as an investment, I explained that a dollar in a Roth is worth more than a taxable dollar, and to exchange them is not a prudent move. I suggested they save up a downpayment on their own, since they will need to save money for retirement any way. He doesn't even want to manage it, says he can hire someone to manage it and still come out ahead. He's never even cut his own grass. I was cutting my grass and changing oil, generally being frugal in many ways, to have money to put away in my accounts as well as theirs.

I agree with you about trying to encourage good decision making, but he has changed a lot since moving to CA and getting married. They make fun of where I live "flyover country" and I've told them the money that got them in a house came from living in flyover country.

Reading this thread with interest, because I don't want to see my money squandered, and am seriously considering limiting how much I leave as inheritance to my 2 kids. Would like to leave some to my 1 grand kid, but am concerned about when and how much. I've watched my sister go through her mid 6 figure inheritance and arguably create more problems (didn't try to get a job in her mid 50s, thought the money would last forever, substance abuse, now in her early 60s and apparently broke - we don't know for sure because she has cut off contact with family, just know that there are tax liens on her modest paid for house, says her cell phone and computer both died she hasn't gotten around to replacing, so won't take calls or e-mails, doesn't respond to snail mail, sad situation).

Best situation for me would be to live long enough to see my grandson become a young adult and decide how much to leave him at that point. I am fearful for his future being raised in the manner he is. I'd always planned to spend money on vacations/experiences where I would pick up the tab, but the CA boy's wife doesn't show up (which means not seeing the grandson), or if she does she throws tantrums and pretty much ruins the stay for everyone. One trip where I specifically paid extra money for accommodations for them and she wouldn't get on the plane because she didn't sleep well the night before. Very narcissistic.

Not trying to be a negative nelly, but this is where we're at. One thing that has come out of all this is I'm more comfortable spending money on the two of us!

 

[kjpliny]

My parents gifted me no money, and I have learned not to expect anything I didn't earn myself. I took this to be a good life lesson in self-reliance, tenacious persistence and delayed gratification...understanding any resulting pride can come with it's own flaws.

 

[SomedaySoon]

Very interesting topic. We have two children mid 30's. One is married and doing very well, the other not as much as the Covid-19 situation has greatly affected employment and earnings. I started gifting 5K equally in 2019, 10K each in 2020, but have given the more challenged offspring another 10K this month. Does it bother me that it might be considered inequitable ? Eh its my money.
I am happy that both are adult, mature, intelligent and hard working. I don't feel that I need to control what they do with the money.

 

[Golden sunsets]

Very interesting topic. We have two children mid 30's. One is married and doing very well, the other not as much as the Covid-19 situation has greatly affected employment and earnings. I started gifting 5K equally in 2019, 10K each in 2020, but have given the more challenged offspring another 10K this month. Does it bother me that it might be considered inequitable ? Eh its my money.
I am happy that both are adult, mature, intelligent and hard working. I don't feel that I need to control what they do with the money.

You raise a good point. If one child were truly struggling, I wouldn't think twice about providing more as needed, and if there were a true need such as a disability, then a special needs trust might be in order.

 

[Joylush]

My parents gifted me no money, and I have learned not to expect anything I didn't earn myself. I took this to be a good life lesson in self-reliance, tenacious persistence and delayed gratification...understanding any resulting pride can come with it's own flaws.

Well said. After further consideration I’m limiting my “gifts”. I just can’t stomach being an enabler of bad choices with my money. If they don’t value their own, they will value mine even less. I’d rather spend it myself or give the extra to someone who needs it, doesn’t expect it, and who will appreciate it. They will get some along the way and more in the end.
But nobody really deserves to get a tremendous amount for doing absolutely nothing or who makes choices I’m opposed to.

I came to this conclusion after relaying to the responsible child my plan. She knows what would be done for her would be done for her brother and she advised against it knowing it would affect her as well. She knows me and she knows her brother and feels it would only bring me disappointment, not any joy in giving. It’s seems like many parents have no problems freely giving and aren’t bothered if the money is squandered or ill spent. I don’t think I could ever be that parent.

I’d love to give more but it’s just not the right time. Some more maturing needs to happen first. I will re-evaluate down the road. In the meantime I plan to just start spending more.

I will always keep things equal. The only time I feel equal doesn’t apply is when there is a special needs child requiring extra care. If one child was struggling (depending on the reason) they might get more that year but I’d make it up to the other one later or give equally if it meant they both got more.

 

[Joylush]

Very interesting topic. We have two children mid 30's. One is married and doing very well, the other not as much as the Covid-19 situation has greatly affected employment and earnings. I started gifting 5K equally in 2019, 10K each in 2020, but have given the more challenged offspring another 10K this month. Does it bother me that it might be considered inequitable ? Eh its my money.
I am happy that both are adult, mature, intelligent and hard working. I don't feel that I need to control what they do with the money.

And if they weren’t mature, making intelligent choices or particularly hardworking would you do the same and not care how your money was being used?

Because if I knew mine were making smart choices, and exhibited strong moral character there would be no need to worry or desire to control.

But it’s gotten me thinking for sure. I think I may very well just start owner financing my rental properties instead of outright selling them. Then when I’m dead there will still be a steady stream of income coming in.

 

[Montecfo]

Hi Joylush,

This is tough for me as I am contemplating the same. Just one son and I think he is rather financially savvy, saves and invests.

The thing I wonder about is kids becoming dependent on parental generosity. And also do not want him to feel we lack confidence in him.

These concerns have paralyzed me so far.

Have you talked to your son about saving and investing recently? That might be a better approach than trying to control how your gifts are used.

For our son I would probably give the money without strings but suggest he use at least part of it for Roth, or for brokerage type investing and offer to help.

You seem to have done a fantastic job of preparing them. We always envision our kids will soak it up, but that does not always happen.

 

[Rambler]

We also have two kids, 33 yo son and 29 yo daughter. Daughter is more financially conscientious, Son is pretty wasteful with his money but his wife seems to have it together.

Without any desire to get into a political battle, there are proposals to reduce the death tax again such that it would significantly dig into our kids’ inheritance, so we are actively considering how to gift, within the limits and without having to file gift forms, yearly so that the money is not wasted on things that are not our intention for the gift...the intention being to help them build for their own retirements. So, we are talking about gifting amounts that would go into Roth accounts and taxable accounts. The condition for subsequent gifts would be that there hasn’t been any money removed from the account. They would be free to invest as they please, but also free to ask advice, if they felt they needed more (they will get advice with the first gift). We’ve also helped fund a down payment for a home for our daughter, and will do the same for our son when they are ready to buy a home. What we don’t want to see is for us to die when they’re about 45, they inherit money without ever having saved a dime of their own, only to quit their jobs and burn thru the inheritance before they are 50. If they earn their own and FIRE at 50, that is another thing altogether.

 

[Joylush]

We also have two kids, 33 yo son and 29 yo daughter. Daughter is more financially conscientious, Son is pretty wasteful with his money but his wife seems to have it together.

Without any desire to get into a political battle, there are proposals to reduce the death tax again such that it would significantly dig into our kids’ inheritance, so we are actively considering how to gift, within the limits and without having to file gift forms, yearly so that the money is not wasted on things that are not our intention for the gift...the intention being to help them build for their own retirements. So, we are talking about gifting amounts that would go into Roth accounts and taxable accounts. The condition for subsequent gifts would be that there hasn’t been any money removed from the account. They would be free to invest as they please, but also free to ask advice, if they felt they needed more (they will get advice with the first gift). We’ve also helped fund a down payment for a home for our daughter, and will do the same for our son when they are ready to buy a home. What we don’t want to see is for us to die when they’re about 45, they inherit money without ever having saved a dime of their own, only to quit their jobs and burn thru the inheritance before they are 50. If they earn their own and FIRE at 50, that is another thing altogether.

You have summed up all my thoughts and feelings with precision. I will be hit with the death tax and that is definitely a concern. So I will be forced to spend to try to mitigate both of the situations you described. I would love to eventually have a financially responsible daughter-in-law if my son doesn’t get there on his own.

 

[ChrisC]

"Prepare the child for the path, not the path for the child." If you've done this, I don't think you need to attach strings to your gifts. I really don't see the parental wisdom that makes gifts conditional on the child undertaking some financial conditions (e.g. money has to go into a Roth account or could only be spent with parental approval). If you gift something, gift it, period! And if it's wasted, then there's a lesson to be learned there for the child and the parent. If you think the gift is going to be wasted, don't give it and spend more time with the adult child covering financial literacy and responsibility -- preparing the child for the path forward.

I'm all in favor of gifts to adult children as long as it doesn't sidetrack our parental mission to advance children to become happy, responsible adults. I've known parents who began funding Roth Accounts for their teenage children and continue to fund them into their late 30's, without telling their children, so that their children would have big Roth Accounts when they retire -- what is the point of this type of retirement savings if your children can't even save for themselves. Their reasoning for not telling their children was that their children are financially irresponsible and would spend it all if they found out about the accounts. So, what do these parents think when they're not around and their adult children get their hands on the Roth IRAs.

When my RMDs start in a few years for me, I plan to gift each one of my children the maximum gift exclusion amount, with no strings attached. And I'm sure they'll find good use of the money. Additiionally, we have started gifting family experiences to our children -- paying for entire family vacations. I do believe it's preferable to give with a warm hand, rather than a cold hand from the grave -- and there's plenty of cold cash they'll get from us too.

 

[Aerides]

After further consideration I’m limiting my “gifts”. I just can’t stomach being an enabler of bad choices with my money. If they don’t value their own, they will value mine even less. I’d rather spend it myself or give the extra to someone who needs it, doesn’t expect it, and who will appreciate it. They will get some along the way and more in the end.

I think this is the right approach for you. Gifts should come freely with no conditions, not a carrot or reward system. (Yes you can give money for those reasons if you like, but IMO, gifts are not attached to goal posts that you define.)

I think it's far more important these two young people make their own paths, learn from mistakes, etc. They are only about 30 and there is plenty of time to meander and figure what works for them individually, towards their own goals, with the independence that can't happen if every decision is somewhat influenced by Dad's approval-via-check.

FWIW, when I was 30? Over 10k in credit card debt, no house, no savings other than putting the minimum in my 401k, bad marriage, etc. I corrected those things over the next few years, and ER'd at 46, but if you'd taken a snapshot of me at that time, your son would look pretty great in comparison.

 

[Joylush]

I think this is the right approach for you. Gifts should come freely with no conditions, not a carrot or reward system. (Yes you can give money for those reasons if you like, but IMO, gifts are not attached to goal posts that you define.)

I think it's far more important these two young people make their own paths, learn from mistakes, etc. They are only about 30 and there is plenty of time to meander and figure what works for them individually, towards their own goals, with the independence that can't happen if every decision is somewhat influenced by Dad's approval-via-check.

FWIW, when I was 30? Over 10k in credit card debt, no house, no savings other than putting the minimum in my 401k, bad marriage, etc. I corrected those things over the next few years, and ER'd at 46, but if you'd taken a snapshot of me at that time, your son would look pretty great in comparison.

Good point. I agree. That’s my fear. That gifting too early won’t allow them to experience the consequences of their choices and impede their opportunity to learn from them. Rather than interfere with their character development I will have to accept the government will be getting more of my earnings than I’d like. Or find someone else with more maturity to gift to.